(Jan-30) The FED recently decided to keep interest rates unchanged. This decision comes amid ongoing concerns about inflation, which remains above the Fed’s 2% target. The current federal funds rate is maintained at a range of 4.25% to 4.5%. President Trump has criticized the Fed’s decision, arguing that lower rates are necessary to boost the economy. However, the Fed is taking a cautious approach, assessing the impact of inflation and potential economic policies.
(Jan-30) The ECB has cut its benchmark deposit rate by 25bps to 2.75%. This is the fourth consecutive rate cut as the ECB aims to support the eurozone economy and manage inflation.
(Jan-28) The market has stabilized, and the rand has improved following the DA reaffirmation of their commitment to the GNU. This comes after weekend reports suggested instability within the GNU due to the President signing a new law facilitating state land expropriation.
(Jan-30) SARB has cut interest rate by 25bps which places the repo rate at 7.50%. Four out of six members voted in favor of the cut.The rate cut aims to support economic growth amid stable inflation and global uncertainties.
By sizwe Mfayela - Institutional Sales Specialist (Jan-31)
By Thuto Mukena - Institutional Sales Specialist (Jan-31)
It’s been a data-packed, headline-heavy week, with risk conditions swinging in all directions. The ZAR has had a choppy week, yesterday’s 25bps SARB rate cut sent the local unit in the red territory, reversing some of its prior session’s gains, leaving the pair to close the week at R18.5688/$.On the vol front, the 1-week volatility risk premium has compressed deeper into negative territory, highlighting that the market mispriced and underpriced this week’s risk conditions. USD/ZAR Implied vols also hover lower as we brace for an exit for this week , the 1W USD/ZAR implied vol tenor no longer trading at a premium over 1M. The tenor closed yesterday’s session 1.87 vol p.p below opening levels.
EM pairs saw mixed spot performance on the day, while most G10 currencies were offered, closing the session weaker. On the implied vol front, G10 implied vols largely tracked spot moves, with USD/CAD and USD/JPY 1-week implied vols standing out as the exceptions, firming by 145bps and 64bps from the open. Main event on the day was the ECB rate decision, EUR/USD 1-week implied vol dropped by 62bps, declining alongside spot in the aftermath of the ECB’s 25bps rate cut, which set the deposit rate at 2.75%. Key take aways from the press conference is that the central bank maintained a data-dependent stance on future cuts, emphasizing that policy remains restrictive while also flagging concerns about growth risks in the region.